Planning Examples
Real-life solutions for a variety of long-term care planning situations
Situation-Based Examples
Advance Planning Long-Term Care Insurance for John & Karen
The Problem: John and Karen recently moved Karen's mother into a nursing home, prompting them to consider their future care plans and look into Long-Term Care Insurance (LTCI). With so many assets to protect, John and Karen want to avoid purchasing an LTCI policy that will go to waste if they don't end up requiring long-term care.
The Solution: After meeting with an attorney, John and Karen choose to purchase a $318,000 Hybrid Long-Term Care Insurance policy that will cover monthly care costs of $12,000 per person for an unlimited number of years. The policy also includes a death benefit of $600,000 if neither spouse requires long-term care. The death benefit is reduced dollar for dollar for claims paid.
$600,000
for Heir(s)
One Spouse Requires Care
$12,000/mo.
Unlimited # of Months
Both Spouses Require Care
$24,000/mo.
Unlimited # of Months
$282,000+
Advance Planning Long-Term Care Insurance for Sharon
The Problem: Sharon is working with an attorney to adjust her estate plan. She recently helped her mother transition to a nursing home and wants to plan for her own future care by purchasing Long-Term Care Insurance (LTCI) while she's still healthy. Unfortunately, Sharon doesn't have much money to spend on an LTCI policy.
The Solution: After discussing options with her attorney, Sharon chooses a Traditional LTCI policy with $150,000 in total benefits and a monthly benefit of $6,000. She will pay $170 per month in premiums until she goes on claim. The policy also includes a 3% inflation rider, which makes it more likely the monthly benefit will cover her care costs. It also has state partnership protection, which will allow Sharon to keep additional assets and still qualify for Medicaid if she exhausts all her LTCI benefits.
$51,000
premiums paid $12,000/mo.
benefit
$300,000
total benefit
3% Inflation Rider
After Exhausting Benefits
$302,000
Medicaid Allowance
State Partnership Protection
$249,000+
Advance Planning Asset Protection Trust for Peter
Vacation Home
The Problem: Peter is reevaluating his estate plan after inheriting a family vacation home from his father. In addition to this real estate, he also owns stock. Together, these assets are valued at $800,000 total. Peter wants to ensure these at-risk assets are safe in the event he requires care and pursues Medicaid benefits in the future.
The Solution: Peter works with an estate planning attorney to fund his stock and extra real estate into an irrevocable trust. As long as he does not require care for at least five years, these assets will be protected from Medicaid. Peter is also able to minimize the tax implications of the assets within the trust.
$800,000
Protected Assets
Stock
Vacation Home
Savings
$800,000+
50%
Advance Planning Funeral Expense Trusts for John & Karen
The Problem: Along with purchasing LTCI, John and Karen choose to set aside some additional funds for their end-of-life expenses. They want to be sure their funeral and burial costs are covered, so their children don't have to worry about paying out of pocket.
The Solution: John and Karen work with an attorney to purchase Funeral Expense Trusts for $15,000 each. Since this is still within the $15,000 limit for their state, the policies will be exempt from Medicaid in the event they pursue Medicaid eligibility down the road. Plus, purchasing these trusts provides peace of mind that their end-of-life expenses will be covered upon their passing.
$15,000/ea.
Remaining Assets
$1,970,000
and Burial Costs
$30,000
Assets Preserved
1.5%
Medicaid Planning Medicaid Compliant Annuity for Carol & Bob
$5,300/mo.
The Problem: Bob entered a long-term care facility 45 days ago, and Carol recently received a monthly bill for $8,500. She needs to find a way to reduce this cost, or she risks draining their entire nest egg.
The Challenge: : Carol and Bob have about $250,000 in excess assets, including an IRA and savings account. In their state, both of these assets are considered countable by Medicaid, so they must spend them down in order to qualify Bob for Medicaid benefits.
The Solution: Carol works with an elder law attorney to spend down their assets properly using a Medicaid Compliant Annuity (MCA). Bob then applies for Medicaid benefits. This ensures Carol can maintain her livelihood at home and preserve a legacy for their children.
$8,500/mo.
$1,500/mo.
$7,000/mo.
Assets Preserved
80%
Medicaid Planning Medicaid Compliant Annuity for Rita
$7,800/mo.
The Problem: Rita's children recently moved her into a long-term care facility after they could no longer care for her at home, and they're worried about being able to cover the monthly cost of $9,000.
The Challenge: Rita has $150,000 in excess assets preventing her from qualifying for Medicaid benefits. Her children want to find a way to make her comfortable in her final years and allow her to age with dignity without having to deplete her nest egg.
The Solution: Rita's children work with an elder law attorney, who helps them spend down Rita's assets properly in a way that allows her to preserve about half of her life savings through a gift to her children. Rita then applies for Medicaid and eventually begins receiving benefits. Rita's children can use a portion of the gift to ensure Rita has exactly what she needs to enjoy her final years.
$9,000/mo.
$1,200/mo.
$7,800/mo.
Assets Preserved
50%
Medicaid Planning Promissory Note for Angelo & Diane
Savings
$7,400/mo.
The Problem: Diane had been taking care of Angelo at home, but now she can no longer give him the care he needs. So, she moves him into a facility that costs $10,000 per month.
The Challenge: Angelo and Diane have $200,000 in excess assets preventing Angelo from qualifying for Medicaid. Plus, they risk depleting their life savings paying the nursing home bill each month, which could leave Diane destitute.
The Solution: After discussing the situation with Angelo, Diane meets with an elder law attorney and decides to fund their excess assets into a promissory note between her and Angelo. Their state allows promissory notes to be used as a spend-down tool for Medicaid, and both of them understand the risks involved. Angelo then applies for Medicaid and begins receiving benefits.
$10,000/mo.
$1,600/mo.
$8,400/mo.
Assets Preserved
85%
Medicaid Planning Funeral Expense Trusts for Carol & Bob
The Problem: As Carol and Bob are spending down their excess countable assets for Medicaid, they consider their future legacy and decide they want to set aside funds for their end-of-life expenses. They want to be sure their funeral and burial costs are covered, so their children don't have to worry about paying out of pocket.
The Solution: Carol and Bob work with an attorney to purchase Funeral Expense Trusts for $12,000 each. Since they are under the $15,000 limit for their state, the policies are exempt from Medicaid and provide peace of mind that their end-of-life expenses will be covered upon their passing.
$12,000/ea.
$226,000
and Burial Costs
$24,000
Assets Preserved
10%
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